Articles Posted in Wage and Hour Disputes

The Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., is the federal statute that governs minimum wage and overtime compensation for many employers around the country. Its overtime provisions have endured, more or less unchanged, since Congress enacted the statute in 1938. A bill currently pending in Congress, however, could change the nature of overtime compensation for workers all over the U.S. H.R. 1180, known as the Working Families Flexibility Act (WFFA) of 2017, would give employees and employers the option of compensatory time off from work, or “comp time,” instead of overtime compensation. Advocates of the bill say that this would only apply in cases of voluntary agreements between employers and employees. Critics, however, contend that the bill would result in less flexibility for workers’ schedules and less money for workers who might depend on overtime compensation. The House of Representatives passed the WFFA in May 2017. Its Senate counterpart, S. 801, is pending in committee.

Overtime compensation is currently required under the FLSA for all non-exempt employees of covered employers. For any amount of work in excess of 40 hours in a workweek, the employer must pay one-and-a-half times the employee’s regular hourly rate. 29 U.S.C. § 207(a). Employees who are exempt from overtime requirements include individuals “employed in a bona fide executive, administrative, or professional capacity;” outside salespersons; and workers in certain agricultural jobs. Id. at § 213(a). The FLSA currently only provides for comp time, instead of overtime, for employees of government agencies. Id. at § 207(o).

The WFFA largely takes the FLSA’s provisions regarding comp time for public employees, found in § 207(o), and applies them to all workers covered by the overtime rules. The bill would add a new subsection (s) to § 207 entitled “Compensatory Time Off For Private Employees.” The new subsection would state that an employee “may receive,…in lieu of monetary overtime compensation, compensatory time off at a rate not less than one and one-half hours” for every hour covered by overtime requirements.

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Employment law is composed of statutes and regulations at multiple levels of government. It is perhaps inevitable that disputes will arise over the meaning of particular legal provisions. Courts have the responsibility of determining how to apply a law or regulation when its meaning is unclear, usually through a process known as statutory construction. If the “plain language” meaning of the rule or statute is ambiguous, they may look at the legislative history to see what lawmakers intended. A recent federal appellate court decision interpreted a statute based on the legislature’s use of punctuation. O’Connor v. Oakhurst Dairy, 851 F.3d 69 (1st Cir. 2017). The court found that a missing serial comma, also known as the “Oxford comma,” in a list of exemptions from a state overtime wage law created a very narrow exemption, which did not include the plaintiffs. This meant that the plaintiffs were entitled to overtime pay.

State and federal employment laws require employers to pay non-exempt workers one-and-a-half times their regular hourly rate for work performed in excess of 40 hours in a week. States may differ in how they define exemptions from overtime law. New Jersey, like most jurisdictions, exempts workers “employed in a bona fide executive, administrative, or professional capacity,” as well as numerous specific jobs. N.J. Rev. Stat. § 34:11-56a4. The O’Connor case deals with Maine’s overtime statute, which exempts workers employed in “the canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of” various food products. 26 Me. Rev. Stat. § 664(3)(F). The dispute centered on the lack of a serial comma between the words “shipment or distribution.”

The “Oxford comma” appears before the final item in a written list of three or more items. For example, in the sentence “I would like an apple, a banana, and a pear,” the Oxford comma appears after the word “banana.” The same sentence without that comma is equally grammatically correct:  “I would like an apple, a banana and a pear.” Usually, use of the Oxford comma is purely a question of style—some style manuals require it, while others do not. At times, though, the lack of an Oxford comma creates an ambiguity.

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The modern workplace often involves complex relationships among employers and between employees and employers. An individual employee might have an employer that issues their paychecks but has them work at the site of, or under the direct supervision of, a different employer. Should an employee need to assert a cause of action under an employment statute like the Fair Labor Standards Act (FLSA), a clear definition of the employee-employer relationship is critical. Federal caselaw and regulations establish guidelines for identifying “joint employers” for the purposes of the FLSA and other statutes. A recent decision from the Fourth Circuit Court of Appeals expands the definition of “joint employer” beyond the definition used in the Third Circuit, which includes New Jersey and other jurisdictions. Salinas v. Commercial Interiors, Inc., No. 15-1915, slip op. (4th Cir., Jan. 25, 2017).

The FLSA governs wage and hour issues, establishing a nationwide minimum wage and requiring employers to pay non-exempt workers time-and-a-half for work in excess of 40 hours in a week. The statute provides some of the broadest definitions of certain key terms in the entire United States Code. It defines “employee” as “any individual employed by an employer,” and its definition of “employ” merely states that it “includes to suffer or permit to work.” 29 U.S.C. §§ 203(e)(1), (g). It does not provide a distinct definition of “employer.”

Regulations promulgated by the U.S. Department of Labor (DOL) note that the FLSA does not limit individual employees to one employer. The DOL attempts to distinguish between “joint employment,” in which multiple employers employ an employee in a single position, and “separate and distinct employment,” in which an individual employee has more than one job with different employers. 29 C.F.R. § 791.2(a). Under DOL regulations, a “joint employment” situation may exist when two or more employers have “an arrangement…to share the employee’s services,” when one employer “act[s]…in the interest of the other employer (or employers),” or when one employer is partly or wholly under the control of another employer. Id. at § 791.2(b).

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The “daily commute” is an iconic element of routine life in the U.S. In 2013, about three-fourths of American workers drove to work by themselves. Average commute time in New Jersey was 28.6 minutes in 2000. That number grew to 30.9 minutes in 2013. Assuming a fifty-week work year, New Jersey workers therefore spent an average of 128 hours and 45 minutes in morning traffic. The number has probably only increased since then, and this does not include time spent getting home at the end of the day. This data raises an interesting question about when a commute constitutes “work” in a legal sense, meaning time for which an employer must compensate a commuting employee. The short answer is that commuting time is usually not “work” in this sense, but the longer answer offers some exceptions to that general rule.

New Jersey law does not address the question of whether commuting time is compensable, so we must look to federal law. The Fair Labor Standards Act (FLSA) of 1938, 29 U.S.C. § 201 et seq., establishes a national minimum wage and rules for overtime compensation. It does not provide a specific definition of “work.” Congress enacted the Portal-to-Portal Pay Act (PPPA), 29 U.S.C. § 251 et seq., in 1947 to address “potential retroactive liability [that] may be imposed upon employers” under the FLSA. Id. at § 251(a). Section 4 of this law exempts employers from liability under the FLSA for failing to pay the minimum wage to an employee for “walking, riding, or traveling to and from the actual place of” employment. Id. at § 254(a)(1).

The U.S. Department of Labor (DOL) has issued regulations based on § 4 of the PPPA. Commuting from home to work is not compensable time under the FLSA in an “ordinary situation,” meaning when such travel is “a normal incident of employment.” 29 C.F.R. § 785.35. This applies, according to the DOL, regardless of whether a worker has a fixed place of employment or works for an employer at multiple locations.
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In May 2016, the U.S. Department of Labor (DOL) issued a new rule that reportedly would have extended overtime pay for millions of workers around the country. Twenty-one U.S. states, led by Nevada, filed suit against the DOL in September to challenge the rule, alleging that it violated provisions of the Fair Labor Standards Act (FLSA), the Administrative Procedures Act (APA), and the U.S. Constitution. State of Nevada et al. v. U.S. Dep’t of Labor et al., No. 4:16-cv-00731, complaint (E.D. Tex., Sep. 20, 2016). A federal judge granted an injunction against the rule in November, temporarily halting its implementation nationwide. An appeal is still pending in the Fifth Circuit as of late January, but a new administration has also moved into the White House. It is not at all clear whether the DOL will continue to pursue the appeal or even defend the rule in the remainder of the trial court proceedings.

The FLSA establishes a national minimum wage and requires employers to pay nonexempt workers overtime pay at a rate of one-and-a-half times their regular rate of pay. Certain employees are exempt from the FLSA’s overtime provisions, including workers in executive, administrative, and professional positions. The DOL refers to these as EAP exemptions or white-collar exemptions. See 29 U.S.C. § 213(a)(1), 29 C.F.R. Part 541. The exemptions apply to employees who work in these fields and earn income above a certain threshold.

The new rule would raise the threshold from the current $455 per week for a full-time employee to $913 per week, or from $23,660 to $47,476 per year. 81 Fed. Reg. 32391, 32393 (May 23, 2016). The DOL estimated that this would affect about 4.2 million people nationwide. The rule was scheduled to take effect on December 1, 2016, but a lawsuit and an injunction changed that.

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The Fair Labor Standards Act (FLSA), along with state laws like the New Jersey Wage and Hour Law (WHL), requires employers to pay overtime compensation to non-exempt employees after they have worked more than 40 hours in a week. 29 U.S.C. § 207(a), N.J. Rev. Stat. § 34:11-56a4. Overtime pay violations can deprive workers of substantial amounts of wages, but while these amounts are significant to these workers, they are often not enough to make individual legal actions worth the cost. State and federal laws allow people with relatively small claims to file a lawsuit as a class action on behalf of the massive number of similarly situated claimants, and the FLSA has a procedure for “collective actions.” A federal judge in New Jersey recently granted certification to a FLSA collective action, as well as several state-law class actions, in a suit for unpaid overtime. Rivet, et al. v. Office Depot, Inc., No. 2:12-cv-02992, opinion (D.N.J., Sep. 13, 2016).

In order to obtain certification as a class action under federal law, plaintiffs must establish four elements:  numerosity of class members, commonality of legal or factual questions, representativeness of the plaintiffs’ claims, and ability of the plaintiffs to “fairly and adequately” represent the class. Fed. R. Civ. P. 23(a). The FLSA does not establish as many specific elements for a collective action, simply stating that the claimants must be “similarly situated.” 29 U.S.C. § 216(b).

The Third Circuit Court of Appeals, whose jurisdiction includes New Jersey, has identified examples of facts and circumstances that can establish or refute that claimants are “similarly situated.” Claimants who work “in the same corporate department, division, and location,” who “advance similar claims” and “seek substantially the same form of relief,” and who “have similar salaries and circumstances of employment” could be considered “similarly situated” for the purposes of an FLSA collective action. Rivet, op. at 4, quoting Zavala v. Wal-Mart Stores, Inc., 691 F.3d 527, 536-37 (3d Cir. 2011).

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Employers that are subject to the federal Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., are obligated to pay their non-exempt employees minimum wage and overtime. The FLSA allows plaintiffs alleging wage and hour violations to file a lawsuit on behalf of all similarly situated employees and former employees, known as a “collective action.” This is similar to a class action under Rule 23 of the Federal Rules of Civil Procedure, but it differs in several important ways. A federal court granted conditional certification last year to a collective action filed against a national restaurant chain. Turner v. Chipotle Mexican Grill, Inc., No. 1:14-cv-02612, mem. order (D. Col., Aug. 21, 2015). By the end of the summer of 2016, more than 10,000 of the defendant’s employees had reportedly joined the lawsuit.

The FLSA requires employers to pay minimum wage, which is currently $7.25 per hour at the federal level. Many states, including New Jersey, have a higher minimum wage, but $7.25 per hour is the amount that workers can enforce under this particular statute. Overtime work, basically defined as work performed over 40 hours in a calendar week, is entitled to 1.5 times the employee’s usual rate of pay. For a worker earning minimum wage, this would be $10.88 per hour. A common FLSA wage and hour violation involves requiring employees to perform duties at times when they are not “on the clock.” This might include time spent changing into and out of uniforms or work clothes and performing other tasks before or after the employer requires employees to clock in or out.

Individual wage and hour claims might not seem particularly significant at first glance, in the sense that an employee might be losing a fraction of an hour’s worth of pay for one shift. These sorts of practices often recur on a daily basis, however, over long periods of time, and the numbers can add up very quickly and become a very significant amount for an individual worker. It still might not be enough to make an individual legal claim worth the cost of both time and money. This is where FLSA collective actions help workers in this sort of situation.

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